“My Aged Care” was introduced on 1 July 2013 and consists of the My Aged Care website and the My Aged Care contact centre. This initiative of the Commonwealth Government provides an integrated web-based portal for care recipients, assessors and service providers (visit www.myagedcare.gov.au). Under the Budget released on 3 May 2016 $136 million will be spent over the next four years on the My Aged Care contact centre to meet a significant increase in demand.
The Commonwealth Government has in the last three years introduced changes to the aged care system known as “Living Longer Living Better” (LLLB).
The reforms are designed to address:
The LLLB reforms introduce the concept of user pays as a trade-off for more choice for care recipients.
The key reforms include:
The actual fees charged will depend on an assessment of income and assets. In other words, the level of Government support will depend on the financial position of the care recipient, with the level of support diminishing the higher the level of income and assets of the care recipient. The assessment therefore differs from that formally applying, which was an assessment based on income only. The inevitable consequence is that a care recipient will in the future pay more for aged care.
The basis of the fee payable by a care recipient is a complex formula simplified by a “fee estimator” on the My Aged Care website.
Care recipients will be asked to pay:
An accommodation payment reflects a market price for the accommodation (room) and an accommodation contribution reflects a means tested contribution for the accommodation (room) provided.
The LLLB reforms also require a provider to publish the maximum prices charged for a room – currently the range is $250,000 to $550,000.
The reforms introduce two categories of residential care recipients:
These payments or contributions are based on means tested amounts (a formula combining income and assets converted to a daily amount). The Commonwealth pays all approved residential care providers an accommodation supplement for each resident whose “means tested amount” is below the supplementary threshold – that is $53.84 or $35.08 per day depending on how recently the facility was built.
A full explanation of the fee structure is beyond the scope of this article. How the fee is paid is, however, of crucial importance in relation to estate planning and a consideration of substitute decision-making (that is, powers of attorney and advanced care directives).
A person entering into the aged care system, particularly residential aged care (and also that person’s family), will have a number of challenges to consider including:
It becomes obvious when discussing these challenges that the person / resident is being called upon to make decisions at a time when frailty and decreasing capacity may create the need for powers of attorney and advance care directives. These documents must, however, be put in place when the person has the required legal capacity, preferably well before retirement. It has been estimated that over 50% of people in residential care have a dementia diagnosis. As people live longer the requirement for trusted representation and assistance becomes inevitable. Whether this is to be found within the family or from outside the family will vary from situation to situation. In the absence of any good reason to the contrary, one would think that family is the starting point. If it is not then alternatives need to be considered.
The changing landscape in aged care brings with it the need to anticipate and respond to both the system itself and personal circumstances. Delay beyond the critical point (loss of capacity or failure to properly structure income and assets) will be a cause of trouble not only for the individual, but also for their family.
To quote Lewis Carroll, “The time has come the walrus said, to talk of many things…”
This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.